Bitcoin Cash: A New Era in Digital Currency
Bitcoin Cash (BCH) reached its highest price of the year at $527 on March 3 but has since deviated from the market trend, bringing attention to the upcoming halving event.
Despite the positive trend in the crypto market, BCH has struggled to maintain its upward momentum in the past week. Analyzing historical market data can provide insights into how the upcoming BCH halving event could affect the price of BTC.
Bitcoin Cash has a halving cycle of four years or 200,000 blocks. The first halving occurred on April 8, 2020, and the next one is expected to take place on April 4, 2024, at block 840,000.
Currently, the block reward is 6.25 BCH, but it will be reduced to 3.13 BCH in approximately 25 days. This significant network event has sparked reactions among miners.
Data from IntoTheBlock reveals that as of April 26, 2023, BCH miners held a total of 9.2 million BCH. However, by March 2024, this balance had decreased to just 6.65 million BCH.
In the past year, miners have sold 2.51 million BCH, worth around $1.1 billion, which accounts for almost 30% of their holdings. This trend is expected to continue as more miners look to capitalize on high prices before the rewards decrease.
However, historical data suggests that this trend could reverse after the halving. In April 2020, miners began accumulating reserves shortly after the halving, signaling a potential shift in the market.
As rewards are reduced, unprofitable miners may leave the Bitcoin Cash network. This could lead to a decrease in mining difficulty and an increase in mining revenue for those who choose to stay.
A similar trend was observed in 2020 when unprofitable miners exited the network, and the remaining miners increased their reserve balances from 10.8 million to a peak of 13.5 million in November 2020. During this period, the BCH price also experienced significant gains.
Bitcoin Cash started the month strongly, reaching a three-year high of $527 on March 2. However, since the countdown to the BCH halving exceeded 30 days, the price has deviated from the broader crypto market trend and has fallen by 20% to around $440 as of March 11.
Nevertheless, based on historical data, this price decline could present an opportunity for bullish traders looking to make a profit.
The chart above illustrates a similar downtrend pattern in BCH price before the last halving in April 2020. Interestingly, shortly after the halving, BCH entered a bullish cycle, resulting in a 480% increase in prices over the following year.
Recent on-chain data trends indicate that long-term holders are positioning themselves for another bullish post-halving cycle in Bitcoin Cash.
In 2020, the halt in selling from BCH miners and their accumulation of reserves greatly contributed to the positive performance of BCH price after the halving. Data shows that BCH’s three-year dormant supply in circulation is decreasing, indicating that long-term investors are becoming less willing to sell as the halving date approaches.
If this trend continues, other strategic investors may also adopt a bullish stance, following the optimism of long-term holders.
Based on the analyzed data trends, the selling frenzy by Bitcoin Cash miners could exert downward pressure on the BCH price, potentially causing a drop below $400 before the halving. However, in the short term, there is support at $410.
On the other hand, in a post-halving bullish cycle, significant resistance could be encountered at $750. However, if the bulls manage to break through this key level, a move above $1,000 becomes a possibility.
